10.03.11

Wall Street's Not the Problem!

The financial industry has been moving away from downtown New York—and out of America—for years. If anything, these angry, ill-informed, purposeless protesters should be marching on Washington, says Stephen Carter.

Up in midtown Manhattan, on Broadway between 47th and 48th, they must be chuckling about the protesters down on Wall Street. Presumably, the demonstrators have no quarrel with Morgan Stanley, because that is the address to which the firm long ago moved its world headquarters. True, news accounts suggest that the precise agenda of the group known as Occupy Wall Street is a bit unclear, even to those marching—CNN quoted one as explaining that the group had gathered “to shape a statement of what it is we want,” and Salon quoted another who said that the only demand was “Join us”—but surely they must be angry at somebody.

Could they be upset with Credit Suisse? No, because Credit Suisse is at 11 Madison Avenue, north of 24th, and well north of Wall Street. Maybe JPMorgan Chase? Alas, that grandly named firm is at 270 Park Avenue, north of Grand Central Terminal and miles from the demonstration. Citigroup? Nope: it’s at 399 Park Avenue, even farther away from Wall Street than JPMorgan Chase. (And not, please note, in the hideous “sore thumb” building that mars the Manhattan skyline still.)

Ah, well. Perhaps the demonstrators are angry at Goldman Sachs—everybody’s favorite “Wall Street” villain—whose glittering fortress at 200 West Street is a brisk walk from the protest site, and unlikely to have been hampered in any way. Around the corner from Goldman is the world headquarters of Merrill Lynch—but Merrill, which came near collapse in 2008, is nowadays a wholly owned subsidiary of Bank of America, and its corporate masters are located in Charlotte, N.C.

Even the eponymous Wall Street Journal, that most reliable defender of free-market capitalism, is no longer located anywhere near the boulevard for which it is named. The Journal’s headquarters at 1211 Avenue of the Americas are far closer to Central Park.

The reason all of this matters is not simply that the protesters have not done their homework—although it would appear they have not. The movement of the major investment and brokerage houses away from Wall Street is part of the larger trend of decentralization of financial decision making around the world. This isn’t the America of 100-odd years ago, when J. P. Morgan and his partners had so much money that they were called upon to save the national economy not once but twice—first by arranging the sale of gold to the federal government to end the panic of 1893, then by building a floor under the plunging stock market to end the panic of 1907.

Few of the world’s ills are caused by nasty cabals full of rich people.

Few of the world’s ills are caused by nasty cabals full of rich people. Conspiracies of the wealthy are fun to imagine—in my novels I invent them often—but if markets were so easily manipulated, the rich would be a whole lot richer. The investment banks nearly died in the financial crisis; to survive, they were forced to become bank holding companies, subject to far greater regulation. Sure, among the titans of “Wall Street,” a few bet right and made fortunes, but most bet wrong and were taken to the cleaners. Many of the big banks continue laying off workers and cutting bonuses. Perhaps the protesters find this prospect delightful, but thousands of downstream jobs then suffer the same fate.

The United States has long been the world’s finance capital, and the dollar remains the world’s reserve currency. But dealmaking—the heart of finance—has been moving for years away from Manhattan, and away from America’s shores. In initial public offerings (IPOs), a field “Wall Street” once dominated, we are no longer on top. (Perhaps the protesters should be demonstrating in front of the British and Chinese embassies?)

I am not suggesting that the demonstrators have nothing to be angry about, only that their anger is misplaced. The Associated Press quoted one protester as explaining that she wants to “wake up every morning not worrying whether we can pay the rent, or whether our next meal will be rice and beans again.” Lots of people are trapped in the same frightening situation. But the money that once supported a less fraught lifestyle did not vanish into Wall Street, or the coffers of greedy corporations; it just vanished. The world is less wealthy than it was four years ago. Whatever short-term stimulus plans politicians may adopt, the question in the end is whether government policy over the long term will restrain or unleash the forces that created so much wealth over the past three decades. Perhaps the demonstrators should be marching on Washington.

Indeed, protesters have cited the Wall Street bailout as the source of their anger. But if systemic collapse was indeed imminent, then the injection of funds was good policy. Many critics think it was a bad idea to prop up financial firms that might otherwise have collapsed. (One of those critics, incidentally, was The Wall Street Journal.) Besides, if the bailout was the problem, then, once again, Occupy Wall Street is disrupting traffic in the wrong city.

America’s economic condition is frustrating for those who are suffering through it. All of us are angry and frightened; all of us should empathize with the anxiety that has brought protesters into the streets. But the search for a single villain to blame is misguided. One of the hardest truths to accept is that complex failures generally have complex causes—and require nuanced solutions. But we prefer to believe that Darth Vader and his minions are out there plotting. The minions might be the corporate-jet owners or the teachers’ unions, conservative talk radio or liberal university faculties. But we must have a vast evil empire to fight—we wouldn’t be America without one. And there is always a simple answer, too: at crisis moments, we fill the air with our magic bullets.

Just listen to the mind-numbing chatter that passes for public debate: We need to cut taxes, while simultaneously raising them. The financial sector requires more regulation, as long as the regulatory burden is reduced. Housing prices remain too high, although they are also too low. Households must pay down their debt, but they must also increase their consumption. We need to reform entitlements without touching them.

Democracy is among the things America does badly these days, but one point should be clear: the reliance of our political class on slogans and applause lines helped get us into our current mess. Getting out of it will require a greater seriousness of purpose and reflection. Dissent is democracy’s lifeblood, but so is public criticism of the dissenter. So here’s mine: Occupy Wall Street will do little credit to America’s rich history of protest movements until it actually comes up with some well-thought-out ideas that we haven’t heard before.